Appeal under Section 37(2)(b) maintainable against joinder order passed under Section 17; no merit where partner retains legal title to LLP share despite assigning beneficial interest via trust, allowing trustee impleadment as co-claimant.

JUDGEMENT :

SOMASEKHAR SUNDARESAN, J.

Context and factual background

1. This is a Petition filed under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (“the Act”), seeking interference with an order purportedly passed under Section 17 of the Act, by which an impleadment Application came to be allowed by the Learned Arbitral Tribunal.

2. Ordinarily, an order of impleadment which is part and parcel of procedural directions and indeed even affecting substantive rights of the parties owing to joinder being allowed, would not be appealable under Section 37(2)(b) of the Act. The jurisdiction under Section 37 is one that entails an exhaustive listing of permissible appeals, which are a creature of statute. Impleadment of a party would not constitute an interlocutory protective measure as envisaged under Section 17 of the Act.

3. However, the basis on which this Petition is sought to be pursued is that the Respondents in this Petition led by Raju V. Shah (for convenience, collectively termed (“Raju”) filed an Application before the Learned Arbitral Tribunal seeking impleadment of trustees of a certain trust, among others, invoking Section 17 of the Act. The Learned Arbitral Tribunal had also been presented with another Application under Section 17 of the Act, and these came to be collectively disposed of by way of the Impugned Order dated April 29, 2024. Therefore, the Petitioners led by Mayank J. Shah (for convenience, collectively termed “Mayank”), would contend that since the measure adopted by the Learned Arbitral Tribunal and indeed the measure sought by Raju, both invoke Section 17 of the Act, the appellate review under Section 37(2)(b) is indeed available.

4. Disputes between Mayank and Raju relate to control and management of a limited liability partnership, Vidhi Research and Development LLP (“LLP”), of which they are partners. Respondent No.1 had entered into a Limited Liability Partnership Agreement dated August 14, 2014 with Pravin Kotak, Jayeshkumar Kotak, Jateen Gupta and Amit Gupta (“Kotaks & Guptas”). Thereafter, pursuant to the execution of an Addendum dated August 14, 2015, Mayank was inducted as partner of the LLP and Kotaks & Guptas ceased to be partners of the LLP (for convenience, both agreements are collectively termed “LLP Agreement”). The LLP holds property earlier held by Pfizer Ltd. and the parties have serious conflict over a veto right in the hands of Raju about the business decisions of the LLP, as contained in the LLP Agreement.

5. For purposes of this Petition, what is relevant is that on June 17, 2019, Raju is said to have informed the partners of the LLP and recorded in an email that Raju had created a trust by which, the benefits of the 20% shares held by Raju in the LLP would vest in a trust titled Raju V. Shah Trust, with his son as the beneficiary (“Trust”). According to Mayank, this constituted a significant change arising out of the assignment of interests by Raju to the trustees of the Trust, but this stance was taken much later in November 2022, when the parties were in litigation. Raju would contend that while transfer of a share in the LLP would make the transferee a new partner, transfer of just the benefits in the profits of the LLP would not constitute any change in partnership.

6. Faced with this contention, Raju filed an application on August 28, 2023 before the Learned Arbitral Tribunal praying that out of abundant caution, Ra